Restaurant owners seek 5% uniform VAT, withdrawal of taxes on essentials

The Bangladesh Restaurant Owners Association (BROA) has called for a uniform 5% value-added tax (VAT) and tax rate for both restaurant and catering services and urged the government to withdraw proposed taxes on essential commodities, warning that additional levies could worsen inflation and increase costs for consumers.

The demands were placed at a press conference in Dhaka today (19 June), where BROA leaders presented their recommendations on the proposed FY2026-27 national budget.

Speaking at the event, BROA Secretary General Imran Hasan said the restaurant industry is facing mounting challenges due to persistent inflation, rising utility costs and a difficult business environment.

"The restaurant industry is going through a difficult period. Increased prices of LPG and electricity have significantly raised operating costs, placing many businesses under severe pressure," he said.

BROA proposed fixing VAT and tax at a uniform rate of 5% for all restaurant and catering businesses. Currently, restaurants pay 5% VAT, while catering services are subject to a 15% VAT rate.

According to the association, the disparity creates an uneven playing field and complicates tax administration. It also recommended bringing all food businesses, including street food vendors, under the VAT registration framework to ensure fair competition and expand the government's tax base.

The association further urged the government to withdraw the proposed 0.5% source tax and 10% supplementary duty on essential commodities, arguing that the measures would ultimately raise food prices and place additional burdens on consumers already grappling with high living costs.

BROA welcomed the proposed accelerated depreciation facility for new investments in restaurants and tourism projects outside Dhaka, saying the incentive could encourage investment and entrepreneurship in the sector.

However, restaurant owners called on the Ministry of Finance and Bangladesh Bank to introduce low-interest financing facilities through banks and financial institutions to support business expansion, technological upgrades and modernisation.

The association also opposed a proposal to extend VAT payment and return submission periods, recommending that the existing monthly system remain in place.

Highlighting regulatory challenges, Imran Hasan said restaurant operators currently require approvals from 10 to 12 government agencies, making the process costly, time-consuming and susceptible to harassment.

To ease the burden, BROA proposed introducing a one-stop service platform and a comprehensive compliance framework to simplify licensing procedures, reduce regulatory complexities and strengthen food safety oversight.

The association also called for a dedicated industrial policy for the restaurant sector, specialised training programmes for workers and the establishment of culinary training institutes to improve workforce skills and service standards.

BROA leaders said such measures would help the restaurant industry grow sustainably, create employment opportunities and contribute more effectively to the country's economy while ensuring better services for consumers.